Posted on by The Daily Shot Editor: Lev Borodovsky

Looking for truck drivers

The Daily Shot: 14-May-21
• The United States
• The Eurozone
• Japan
• Asia – Pacific
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Food for Thought

 

The United States

1. Let’s begin with some updates on the labor market.
 
• Online search activity points to a return to the workplace.
 
Source: @benbreitholtz  
 
• Jobless claims continue to trend lower.
 
Source: Oxford Economics  
 
• According to a Morgan Stanley survey, corporate hiring plans keep growing.
 
Source: Morgan Stanley Research  
 
• A substantial number of older Americans retired since the start of the pandemic (2 charts). This is one of several factors contributing to labor shortages.
 
Source: @WSJ   Read full article  
 
Source: The New York Times   Read full article  
 
• Anectodal evidence continues to point to wage hikes.
 
Source: @WSJ   Read full article  

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2. Next, let’s continue with inflation trends.
 
• The April report on producer prices surprised to the upside. The third chart below excludes trade services (business markups), which tend to be volatile.
 

 
Here is the core PPI index relative to trend.
 

 
• On a year-over-year basis, the core PPI is yet to peak, according to Pantheon Macroeconomics.
 
Source: Pantheon Macroeconomics  
 
• Materials and goods inflation, which tends to be volatile, is unlikely to persist at high levels, according to Citi Private Bank.
 
Source: Citi Private Bank  
 
• These charts show contributions to the core CPI. COVID-sensitive sectors and items impacted by chip shortages drove the latest gains (2nd chart).
 
Source: Nomura Securities  
 
• Nomura expects the core PCE inflation (2nd chart) to overshoot the FOMC’s forecasts this year but undershoot them next year.
 
Source: Nomura Securities  
 
• Owners’ equivalent rent inflation is stabilizing after the pandemic slump and could rise along with housing prices (2 charts).
 
Source: Variant Perception  
 
Source: ING  

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• Elevated consumer spending capacity is expected to be a tailwind for inflation.
 
Source: @bopinion   Read full article  
 
Here is a forecast for consumer spending from Oxford Economics (vs. other predictions).
 
Source: Oxford Economics  
 
• Below are some price trends relative to pre-pandemic levels.
 
Source: Felix Salmon, @axios  
 
• While airline tickets and used cars saw significant price increases recently, these gains are well below the long-term CPI trend.
 
Source: TS Lombard  

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3. Freight expenditures have risen sharply since the pandemic lows.
 
Source: Cass Information Systems  
 
Shipping costs have been surging.
 
Source: Cass Information Systems  
 
And the shortage of truck drivers is becoming more acute (2 charts).
 
Source: Arbor Research & Trading  
 
Source: Cass Information Systems  
 
Shipping bottlenecks have been contributing to rising factory wait times.
 
Source: @markets   Read full article  

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4. Air travel continues to recover.
 
Source: @WSJ   Read full article  
 
5. Economic data surprises have returned to a normal range after reaching unprecedented highs.
 
Source: Deutsche Bank Research  

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The Eurozone

1. Yields continue to climb.
 

 
Source: @WSJ   Read full article  

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2. The pace of vaccinations has caught up with the US.
 
Source: @ISABELNET_SA, @MorganStanley  
 
And COVID cases are tumbling.
 
Source: Pantheon Macroeconomics  

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Japan

1. The Economy Watchers index declined more than expected.
 

 
2. The growth in Japan’s broad money supply has been robust since the start of the pandemic.
 

 
3. The March trade surplus surprised to the upside.
 

 
4. Tokyo office vacancies keep climbing.
 

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Asia – Pacific

1. Singapore’s stocks tumbled in response to new COVID curbs.
 

 
Source: Reuters   Read full article  

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2. New Zealand’s housing market has been hot.
 
Source: ANZ Research  
 
But is home price appreciation about to peak?
 
Source: ANZ Research  

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Emerging Markets

1. COVID cases spiked in Thailand.
 

 
The Thai baht is weaker.
 

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2. South Africa’s mining output has recovered.
 

 
3. Israel’s Benjamin Netanyahu is back on top.
 
Source: @axios   Read full article  
 

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4. Next, we have some updates on Brazil.
 
• Inflation continues to run above the central bank’s target rate, suggesting further rate hikes to come.
 
Source: Scotiabank Economics  
 
• Economic activity strenghened in the first quarter.
 

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5. Colombia’s factory output surged last quarter.
 

 
6. Will EM equities start to outperform given the sharp rise in commodity prices?
 
Source: Cornerstone Macro  

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Cryptocurrency

1. It’s been a rough week for cryptocurrencies.
 
Source: FinViz  
 

 
Bitcoin is below $50k, but it held support at $47k.
 

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2. About 80% of Ethereum derivatives trading is in perpetual swaps.
 
Source: @skewdotcom  
 
3. The cost of insuring against a 20%+ correction in bitcoin over the next three months has spiked.
 
Source: @skewdotcom  
 
4. Popular semiconductor stocks have traded in lockstep with bitcoin over the past few years.
 
Source: Victor Cossel; Cornerstone Macro  
 
5. Grayscale Bitcoin Trust’s discount to AUM continues to widen.
 
Source: @EricBalchunas, @JSeyff  
 
6. This chart shows the asset portfolio backing Tether.
 
Source: Bloomberg   Read full article  
 
7. And finally, we have our friend Elon’s most frequently used words on Twitter.
 
Source: @rohunvora  

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Commodities

1. Beijing is trying to contain the runaway steel prices. And we are starting to see some results.
 
• Steel rebar:
 

 
• Coking coal:
 

 
• Iron ore (massive decline):
 

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2. The gold/copper ratio is at an extreme low, which suggests investor complacency.
 
Source: JP Morgan  
 
3. Tin prices have been rising as inventories tighten.
 
Source: @WSJ   Read full article  
Source: @WSJ   Read full article  

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4. US lumber futures are off the highs.
 

 
5. US grain shipping is backed up on the Mississippi River.
 
Source: Bloomberg   Read full article  
 
6. US corn and other grains are off the highs.
 
Source: @WSJ   Read full article  
 

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7. Most commodity futures have shifted into backwardation. 
 
Source: Variant Perception  

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Energy

1. Brent futures are consolidating.
 

 
2. Capital Economics expects oil prices to peak this year before falling.
 
Source: Capital Economics  
 
3. Fitch Solutions estimates 2-3 million barrels per day could be added to production over the next few months, significantly increasing global crude oil throughput.
 
Source: Fitch Solutions Macro Research  

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Equities

1. The S&P 500 held support at the 50-day moving average.
 

 
2. Growth stocks continue to underperform.
 

 
Source: Yahoo Finance   Read full article  
 
The IT sector started to underperform materials recently after several years of outperformance.
 
Source: Alpine Macro  
 
The Nasdaq 100/S&P 500 ratio continues to move lower.
 

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3. Transportation stocks have been outperforming, boosted by Kansas City Southern.
 
Source: @WSJ   Read full article  
 

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4. Airline stocks are recovering, although passenger traffic remains very low.
 
Source: Alpine Macro  
 
5. Someone is making a big bet against semiconductor stocks.
 
Source: Bloomberg   Read full article  
 
6. Overall equity positioning is starting to decline from peak levels, …
 
Source: Deutsche Bank Research  
 
… mostly driven by discretionary investors. Systematic strategy positioning has stayed well below prior peaks despite the equity rally.
 
Source: Deutsche Bank Research  

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7. Here is the current rally vs. the previous bull market.
 
Source: @RyanDetrick  

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Food for Thought

1. Rockets launched into Israel:
 
Source: @adam_tooze, @financialtimes   Read full article  
Source: @AFP, Anas Baba  
 
• Estimated Hamas military stockpile:
 
Source: @adam_tooze, @financialtimes   Read full article  

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2. Afghan civilian death toll:
 
Source: Statista  
 
3. Bribery rates across Europe and Central Asia:
 
Source: @simongerman600, @anticorruption   Read full article  
 
4. China’s invasion plans for Taiwan (2 maps):
 
Source: Express   Read full article  
 
Source: FP   Read full article  

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5. Empire cycles:
 
Source: Ray Dalio   Read full article  
 
6. Cities with most billionaires:
 
Source: Statista  
 
7. Most popular languages studied on Duolingo across Europe:
 
Source: @simongerman600, @Duolingo   Read full article  
 
8. US concerns about contracting COVID:
 
Source: Gallup   Read full article  
 
• Social distancing:
 
Source: Gallup   Read full article  

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9. Readiness to go out, by age:
 
Source: Invisibly   Read full article  
 
10. Trying to see the 12 dots at once:
 
Source: Veselin Jevrosimovic  

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Have a great weekend!

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